Police said they started to get numerous 911 calls starting around 10:15 p.m. Wednesday of a car swerving and out of control.
One man, Rudy De La Cruz, spotted the car, and stayed on the phone as he told authorities there were children inside the car.
"They looked scared when they saw me, like they knew they were doing something wrong," said De La Cruz. "They were looking at me, all over the dashboard and driving at the same time. So they looked scare."
At one point, the 8-year-old driver had taken out a fence, but kept on going.
Two responding patrol officers spotted the vehicle, and it crashed "almost instantly" after police turned on their emergency lights, police said. The police cars did not have their sirens on and it's not known how fast the boy was driving.
The girl died at the scene, and the boy suffered an ankle injury that didn't appear serious, said police.
Both children were still dressed in their pajamas. Their mother had also called 911 when she discovered her kids were gone only 30 minutes after she put them to bed. She then saw that the front door was open and her car was gone.
She knocked on doors in the neighborhood and contacted police. She had assumed the children had been kidnapped.
Just minutes earlier, police received 911 calls from people who reported seeing the car being driven in the area.
The crash occurred only a block from the apartment complex where the family lived, and the mother ran over after seeing the police activity.
Sgt. Steve Martos said there is no criminal element in the incident.
"From mom's standpoint, there's nothing to indicate any neglect or abuse. From the kid's point, he's 8 years old so his mental state is not culpable," Martos said.
The Associated Press contributed to this report.